Businesses increase stockpiles 0.3 percent

, The Associated Press

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Stockpiles

Companies increased their stockpiles a steady pace in November from October, responding to a solid increase in sales.

The Commerce Department said Tuesday that business inventories grew 0.3 percent in November, matching the October gain.

Sales rose 1 percent in November, the best showing since a 1.2 percent rise in September. In October, sales had fallen 0.3 percent, reflecting in part disruptions caused by Superstorm Sandy.

More restocking leads to more factory production, which boosts economic growth. Faster restocking helped the economy grow at a 3.1 percent annual rate from July through September.

Most economists say inventory growth has slowed from this summer, a key reason many are predicting economic growth weakened to a rate below 2 percent in the October-December quarter.

The inventory to sales ratio has held steady since August, a sign that businesses were not expecting much growth in sales. In November, the ratio was 1.28 months. That means it would take about five weeks to exhaust stockpiles at the November sales pace.

The sales gain in November was led by a 2.3 percent surge in demand at the wholesale level. A separate report Tuesday showed that retail sales increased again in December, rising 0.5 percent, the best showing since September.

Total inventories rose to a seasonally adjusted $1.62 trillion in November, up 23.9 percent from the recession low hit in September 2009.

Retail inventories rose 0.6 percent in November, leading all categories. Wholesale stockpiles grew 0.3 percent, while manufacturing inventories were flat.

Income growth remains weak, constraining the amount that consumers can devote to increased spending. Consumer spending drives roughly 70 percent of economic activity.

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